Pennsylvania Commercial Debt Collection Complaint

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Below is a complaint filed to recover a large debt after assets were allegedly fraudulently conveyed.

IN THE BERKS COUNTY PENNSYLVANIA COURT OF COMMON PLEAS

COMPLAINT

Count I

Fraudulent Conveyance

This claim is filed by SMS Financial XXIV, LLC pursuant to the Pennsylvania Uniform Fraudulent Transfer Act, 12 Pa.C.S.A. §5104 et seq. (the “Act”), to recover assets intentionally fraudulently transferred and conveyed by and among the defendants and others in violation of the Act, and for declaratory relief, and in support thereof plaintiff avers as follows:

1. Plaintiff, SMS Financial XXIV, LLC is an Arizona limited liability company with its principal place of business located at 2645 North 7th Avenue, Phoenix, Arizona (“SMS”).

2. Defendants Joseph J. Templin and Krista W. Templin, husband and wife, are individual citizens of the Commonwealth of Pennsylvania whose last known address is 136 Kathleen Lane, Wyomissing, Pennsylvania (collectively referred to as the “Templins”).

3. Defendant Drumar Development Company is a Pennsylvania corporation with offices located at 1215 Luzerne Street, Reading, Pennsylvania (“Drumar”).

4. Defendant Sea Breeze, LP is a Pennsylvania limited partnership with offices located at 1215 Luzerne Street, Reading, Pennsylvania (“Sea Breeze”).

5. Defendant Avastone LLC is a New Jersey limited liability company with its principal business address at 272 21st Street, Avalon, New Jersey, and was established on about February 2, 2007 (“Avastone”).

6. Upon information and belief the Templins are the sole shareholders, partners, limited partners or members of Drumar, Sea Breeze, Avastone and numerous other undisclosed entities related by common ownership.

7. On about February 11, 2005 Drumar borrowed $5,000,000 from Sovereign Bank, pursuant to a Loan Agreement and Promissory Note. True and correct copies of the Loan Agreement and Promissory Note are attached hereto as Exhibit A and B, and are collectively referred to as the “February Loan Agreement.”

8. On December 21, 2005 Drumar and Sovereign Bank amended the February Loan Agreement whereby the amount of the loan from Sovereign Bank to Drumar was increased from $5,000,000 to $8,500,000. A true and correct copy of Amendment Number One to Loan Agreement Dated February 11, 2005 Between Sovereign Bank (“Bank”) and Drumar Development Company (“Borrower”), is attached hereto as Exhibit C. A true and correct copy of the Amended and Restated Promissory Note dated December 21, 2005 is attached hereto as Exhibit D. Exhibits C and D are collectively referred to as the “December Loan Agreement.”

9. Pursuant to the terms of the Amended and Restated Promissory Note dated December 21, 2005, Drumar agreed to the entry of judgment by confession against Drumar upon the occurrence of a default under the terms of the December Loan Agreement.

10. As a condition of Sovereign Bank agreeing to lend money to Drumar, Sovereign Bank required Sea Breeze to unconditionally guaranty to repay the obligation of Drumar to Sovereign Bank pursuant to the terms of the Unlimited Guaranty and Suretyship Agreement dated September 9, 2005, a true and correct copy of which is attached hereto as Exhibit E (the “Sea Breeze Guaranty”).

11. As a further condition of Sovereign Bank agreeing to lend money to Drumar, Sovereign Bank required the Templins to unconditionally guaranty to repay the obligation of Drumar to Sovereign Bank pursuant to the terms of the Amended and Restated Unlimited Guaranty and Suretyship Agreement signed by the Templins, dated December 21, 2005, a true and correct copy of which is attached hereto as Exhibit F (the “Templins’ Guaranty”).

12. Pursuant to the terms of the Sea Breeze Guaranty and the Templins’ Guaranty, Sea Breeze and the Templins agreed to entry of judgment by confession against each of them jointly and severally upon the occurrence of a default by Drumar under the December Loan Agreement, or a default under each respective guaranty.

13. Drumar defaulted under the terms of the December Loan Agreement and the default was not cured by Drumar, the Templins or Sea Breeze.

14. The February Loan Agreement and the December Loan Agreement and all of the guaranties and other documents and securities applicable thereto and all of Sovereign Bank’s rights therein were assigned by Sovereign Bank to SMS pursuant to the Bill of Sale and Assignment dated March 23, 2011, a true and correct copy of which is attached hereto as Exhibit G (the “Assignment”).

15. As the result of defaults by the Templins, Drumar and Sea Breeze judgment by confession was entered against them on May 17, 2011 in the Berks County Court of Common Pleas, Docket No. 11-13917, in favor of SMS and against the Templins, Drumar and Sea Breeze in the amount of $446,633.94, and none of those defendants moved to open or challenge the May 17, 2011 judgment, hereinafter referred to as the “May 17th Judgment.”

16. On about July 12, 2011 SMS served upon the Templins, Drumar and Sea Breeze Interrogatories in Aid of Execution Pursuant to Pa.R.C.P. 3117(a), but these defendants failed and refused to respond to identify their assets available and subject to execution to satisfy SMS’s May 17th Judgment.

17. As part of its investigation to discover assets of the defendants subject to execution, SMS discovered that on about December 10, 2007 Drumar, which is owned solely by the Templins, fraudulently transferred to Avastone, a limited liability company also solely owned by the Templins, the premises located at 272 21st Street, Avalon, New Jersey (the “Avalon Property”) for $130,000.

18. The sale of the Avalon Property by Drumar to Avastone was made without Drumar receiving reasonably equivalent value in exchange for the transfer, and the remaining assets of Drumar were insufficient for Drumar to meet its obligations to Sovereign Bank, and Drumar became insolvent as the result of the transfer.

19. The sale of the Avalon Property by Drumar to Avastone was made with actual intent to hinder, delay and defraud Sovereign Bank because the transfer was to an insider, as the Templins retained possession of the Avalon Property after the transfer, the transfer was substantially all of Drumar’s assets, the transfer of the Avalon Property was not made for reasonably equivalent value in exchange for the transfer, and the defendants have concealed their assets from SMS.

20. The transfer of the Avalon Property and other transfers by and between the defendants and others not yet discovered by SMS are fraudulent conveyances intentionally done in violation of the Pennsylvania Uniform Fraudulent Transfer Act to hinder, delay and defraud SMS and other creditors of the defendants.

WHEREFORE, plaintiff demands judgment be entered in favor of SMS Financial XXIV, LLC and against defendants Drumar Development Company, and Sea Breeze, LP, and Joseph J. Templin and Krista W. Templin, husband and wife, and Avastone LLC, jointly and severally, and an order issued as follows:

  1. Order the Templins to deliver to SMS all of their stock certificates or other documentation of ownership or membership interest in Avastone LLC, endorsed for transfer to SMS together with all of the books, records and assets of Avastone LLC; and
  2. Enjoin Avastone LLC from transferring any legal or equitable interest in the Avalon Property and all other assets of Avastone, LLC until all of the Templins’ interest in Avastone LLC has been delivered to SMS; and
  3. Enjoin the Templins, Drumar, Sea Breeze, Avastone and every other entity in which the Templins own a majority interest from transferring any legal or equitable interest in any property or asset of such entity until further order of this Court; and
  4. Order the defendants to disclose to SMS the identity and whereabouts of every asset of every type, kind and description owned now or previously owned by any defendant, and further order each defendant to disclose to SMS every transaction whereby any asset of any defendant was transferred to any person or entity or conveyed by any means, method or devise since October 2007; and
  5. Order the Templins, Drumar and Sea Breeze to provide full, complete and verified answers in response to the Interrogatories in Aid of Execution Pursuant to Pa.R.C.P. 3117(a) previously served on them by SMS; and
  6. Appoint a receiver to take possession of and safeguard all assets of the Templins, Drumar, Sea Breeze, Avastone pending the litigation of this lawsuit; and
  7. Award contractual legal fees and expenses, costs and interest to SMS in accordance with the respective loan agreements and guaranties; and
  8. Order such other relief required by the circumstances.

Count II

Declaratory Judgment

21. Plaintiff hereby incorporates by reference paragraphs 1 through 20 as though fully set forth herein.

22. By virtue of the May 17th Judgment against the Templins, SMS is entitled to execute and levy upon all assets owned by the Templins including without limitation all of their ownership interests in Drumar, Sea Breeze, Avastone and all other business interests in which the Templins have an ownership interest.

23. By virtue of the May 17th Judgment against the Templins the Templins should be ordered to deliver to SMS all of their stock certificates and other documentation of ownership or membership interest in every business in which the Templins have an ownership interest, endorsed for transfer to SMS together with all of the books, records and assets of each such business interest.

24. By virtue of the May 17th Judgment against the Templins the Templins should be enjoined from transferring any legal or equitable interest in all assets in which they have an ownership interest until the May 17th Judgment in favor of SMS has been satisfied.

25. By virtue of the May 17th Judgment against the Templins the Templins should be ordered to disclose to SMS the identity and whereabouts of every asset of every type, kind and description owned now or previously owned by any defendant, and further ordered to disclose to SMS every transaction whereby any asset of any defendant was transferred to any person or entity or conveyed by any means, method or devise since October 2007.

26. By virtue of the May 17th Judgment against the Templins the Court should appoint a receiver to take possession of and safeguard all assets of the Templins, Drumar, Sea Breeze, Avastone and all other assets owned or controlled by the Templins pending the litigation of this lawsuit, to protect the assets subject to execution by SMS.

27. By virtue of the May 17th Judgment against the Templins the Court should order the Templins, Drumar and Sea Breeze to provide full, complete and verified answers in response to the Interrogatories in Aid of Execution Pursuant to Pa.R.C.P. 3117(a) previously served on them by SMS.

WHEREFORE, plaintiff demands judgment be entered in favor of SMS Financial XXIV, LLC and against defendants Drumar Development Company, and Sea Breeze, LP, and Joseph J. Templin and Krista W. Templin, husband and wife, and Avastone LLC, jointly and severally, and an order issued as follows:

  1. Order the Templins to deliver to SMS all of their stock certificates or other documentation of ownership or membership interest in Drumar, Sea Breeze, Avastone and all other business interests in which they have an ownership interest, endorsed for transfer to SMS together with all of the books, records and assets of each such business entity; and
  2. Enjoin the Templins from transferring any legal or equitable interest in any asset of Drumar, Sea Breeze, Avastone and all other business interests in which they have a controlling interest until the May 17th Judgment has been satisfied; and
  3. Enjoin the Templins, Drumar, Sea Breeze, Avastone and every other entity in which the Templins have a controlling interest from transferring any legal or equitable interest in any property or asset of such entity until further order of this Court; and
  4. Order the defendants to disclose to SMS the identity and whereabouts of every asset of every type, kind and description owned now or previously owned by any defendant, and further order each defendant to disclose to SMS every transaction whereby any asset of any defendant was transferred to any person or entity or conveyed by any means, method or devise since October 2007; and
  5. Order the Templins, Drumar and Sea Breeze to provide full, complete and verified answers in response to the Interrogatories in Aid of Execution Pursuant to Pa.R.C.P. 3117(a) previously served on them by SMS; and
  6. Appoint a receiver to take possession of and safeguard all assets of the Templins, Drumar, Sea Breeze, Avastone and all other business interests in which they have an interest pending the litigation of this lawsuit; and
  7. Award contractual legal fees and expenses, costs and interest to SMS in accordance with the respective loan agreements and guaranties; and
  8. Order such other relief required by the circumstances.

Respectfully submitted;

BERKOWITZ ∙ KLEIN LLP

______________________________

Gerald S. Berkowitz, Esquire

I.D. # 39381

629 B Swedesford Road

Swedesford Corporate Center

Malvern, PA 19355-1530

610-889-3200

Attorney for Plaintiff

SMS Financial XXIV, LLC